What Are Sofas On Finance?
In short, a sofa on finance is when you borrow money from a company to purchase a couch. The company you are buying from will process your finance purchase via a partner company who deals with its finances as this reduces financial risk.
However, unlike getting a loan, you will not see the money directly. It will go straight to the company you wish to purchase with. You will then pay the money back in weekly or monthly instalments until the sofa is paid off in full.
This is becoming an extremely popular choice as it is much more affordable, especially for younger generations who may not have enough savings when they move into their first home.
The person who will be paying back the money is the one who signs their name on the form. This person must assure they have the funds in their account when the money is due to be taken.
Most brands offer you the option to purchase their sofas on finance. This is because they can generate more sales, as buying a couch on finance appears more affordable and realistic than paying the full price on the day of the purchase.
How Do Sofas On Finance Work?
Now the basics have been covered regarding purchasing a couch on finance; it is time to look into how they work. This will help you to decide whether buying a sofa on finance will work for you.
As previously discussed, purchasing a sofa on finance works in a way where you borrow money from the company who plans to sell you the sofa. The majority of these companies use their own financial partners, whereas others use outside companies such as banks.
Credit checks are commonplace when buying anything on finance. Most companies conduct these checks to ensure that the person can afford the payments and has the financial capacity to meet payment deadlines.
They also need to ensure the company’s money is safe in your hand; therefore, there is no guaranteed that you will be accepted.
The better your credit score, the more likely you will be accepted. However, do not worry, there are still some companies who offer their customers a chance to purchase a sofa on finance with bad credit.
If you have been accepted, you will be asked to sign an agreement document, which will clarify all of the financial details. This document will include monthly payment prices, interest rates, deposit amount, term time and any other important information.
You will also be agreeing to make the payments, and the form should also state what repercussions can happen if you do not pay on time. Some companies will allow overpayment, but you must read the small print of your agreement to see what this entails.
The main question everyone asks regarding purchasing a sofa on finance is how the repayment price is calculated. Most companies will work out the repayments with a straightforward equation - (Full Cost - Deposit) / term length + interest rate.
Some companies do offer interest-free and no deposits, therefore it can just be the cost of the sofa divided by the term time. If companies do require a deposit, this will be taken off the price of the full sofa.
Benefits of Tablets on Finance
As the basics of sofa finance have been covered, it is time to look into this topic deeper, starting with the benefits of sofas on finance and is this purchase option a good idea?
Interest-Free
Most brands offer you 0% interest when you purchase a sofa on finance. This means that you will be only paying for the cost of the couch itself with no hidden interest payments. The length of interest-free periods can range from 6 months to up to 4 years - giving you plenty of time to pay back the cost.
Affordability
One of the biggest advantages of purchasing a sofa on finance is that it can be much more affordable than paying the full amount.
This means you will not be breaking the bank, while also makes updating your decor more affordable, allowing you to stay on trend for less.
No Deposit
A lot of companies allow you to buy sofas on finance with no deposit needed, which means there is no upfront cost for you. You will not need to save up a deposit before you can purchase your sofa, and you will only be responsible for paying your weekly or monthly payments on time.
Disadvantages of Sofas on Finance
There are also many disadvantages of purchasing sofas on finance, which are essential to consider before taking the leap and financing a couch.
Credit Checks
Most companies who offer sofas on finance will require you to have a credit check. Having too many credit checks can damage your credit score so you should try to keep these to a minimum and only consent to a credit check when you are sure about a purchase.
If a company does perform a credit check and you have bad credit, you may not be approved, which is a significant risk.
Possibility of Debt
When purchasing a sofa on finance, there is the possibility of getting yourself into debt if you miss any payment. If you have any recurring missed payments, this will enable the debt to grow, which can have a significant effect on your credit.
This could be detrimental for future expenses, as companies may not trust you to invest in another finance product.
Possible Retention
When you purchase a sofa on finance, the contract will likely contain a retention of title clause which you would have agreed to you when signing the documents.
This means that if you do not pay the monthly repayment fees, there is a chance they will come to retain the goods, as the products will still belong to the company until all payments are made.
Who Offers Sofas on Finance?
There are many different companies which offer the choice to purchase sofas on finance. Take a look at some of the most popular companies in order to see who offers the best finance deal.
DFS
DFS is one of the most popular companies who offer sofas on finance. This company offers a large range of sofas, sofa beds and corner sofas on finance.
The main benefit of using DFS is that they provide no-deposit finance, which is an excellent option if you do not have the extra savings for a deposit.
They also offer 0% interest for up to four years, which means your monthly payments will be significantly less over an extended period of time. DFS do conduct credit checks; therefore, anyone with bad credit may not be approved by this large sofa retailer.
Furniture Village
Another popular company known for their sofa on finance deals is Furniture Village. Unlike DFS, Furniture Village do not have a wide selection of couches to choose from; however, there are still some great options available.
One of the main benefits of buying from Furniture Village is that they offer 0% interest on finance for up to four years.
Again, making your monthly repayment fees lower than others, however with Furniture village you need to spend at least £375 to be offered the finance option. Not to worry, as most of their sofas are above this price.
You will also need to put down a deposit of at least 20%, which again isn’t too bad, as the bigger your deposit is, the lower your monthly repayment fees will be.
Wayfair
Wayfair is another company which allows you to buy couches on finance, although the difference with Wayfair is that its products are only online.
This means you will only be able to able to view photos online, so your expectations may not be met on delivery when you view it in person.
Wayfair’s finance deals provide 0% interest for up to one year, so your repayment fees will be slightly higher in comparison to a DFS or Furniture Village purchase.
Wayfair also state that they use credit checks through Barclays finance, making accepting more difficult with this finance option. There are also many rules on their finance page which you must agree to before you can be accepted.
Sofa.com
The final company is sofa.com - an online-based sofa retailer that offer sofas on finance. Due to the sole focus on sofas, they have an extensive range to choose from.
The main benefit of using this brand is that the finance deals two years of interest-free payment, which will enable you to keep the cost of your monthly payments low.
However, they do require you to pay an upfront deposit of at least 15%. As mentioned above, the higher your deposit, the lower your monthly payments, so the deposit amount is great for reducing monthly instalments. Still, it may not be ideal if you cannot afford the deposit.
Another problem with this company is that it is online-based, meaning you can only view their sofas online. You will need to rely on reviews and images to decide if the couch is for you, which is a risk as you may not be satisfied when you see it in person.
Can I Purchase a Sofa on Finance with Bad Credit?
Credit score is a worry for the vast majority of people, although many people may not realise that they have bad credit. Luckily, there are some companies who cater to people with bad credit, although the options are limited, in comparison to buyers with a good credit score.
If you know you have bad credit, you are more than likely aware that It is much more difficult for you to be approved for finance for multiple reasons.
The main reason why you may not be approved is that your credit score shows the company your inability to make payments on time. If your credit score is bad, the trust may not be there, so more than likely, the company will not want to take the risk of accepting your application.
However, it is important that you do not lose faith. There are ways you can work around this, such as purchasing from businesses who offer sofas on finances without the need for a credit check.
One company which provides this service is SCS; however, no matter the cost of your couch, you need to pay a deposit of at least £69.
Considerations Before Purchasing a Sofa on Finance
Before you purchase a sofa on finance there are many aspects you need to consider including the following:
Can You Afford to Purchase Outright?
Before purchasing a sofa on finance, one of the first aspects you should consider is whether you can afford to purchase it outright. If you can afford to buy a sofa in full without using all your savings, then this should definitely be your first option.
This will reduce the risk of getting yourself into debt, with the added benefit of immediate sofa ownership.
Can You Afford the Monthly Payments?
If you cannot pay for a sofa in full and decide that finance is the way forward, you must then consider whether you can afford the monthly repayments. To do this, you should determine your budget to establish how much spare funds you have each month.
Knowing how much you can afford will save you the worry of being denied finance. If you do not have the spare funds, you should wait a while longer as it will protect you from the risk of debt and damaging your credit score.
Have You Explored All Your Options?
Before agreeing to purchase a sofa on finance, you must consider all of your options. Finance is not the only way, but it is one of the easiest choices, along with buying a couch outright.
You also have the option to take out your own loan from a bank to pay for the goods which involves repaying the bank directly, but you will own the sofa, to begin with.
However, the problem with taking out a loan is that most banks do charge interest on loans, which can make it more expensive in the long run.
Now you have all the information you need to decide whether buying a sofa on finance is the right option for you. From this article, you will understand that it is indeed possible for you to purchase any sofa on finance no matter your circumstances.
It may be more difficult for some than others, but the options are there for you.
Before making a final decision, you should research a wide range of companies who offer sofas on finance and decide who will offer the best plan for you.
FAQs
Q: Do you need to put down a deposit for a finance sofa?
A: No, you do not always need to put down a deposit to be able to finance a sofa. There are many companies out there who offer no deposit finance options; however, be careful as some companies will require a deposit.
Q: Can I pay weekly sofa finance payments?
A: Yes, it is possible to pay your sofa finance payments weekly. Most companies prefer monthly payments, but weekly options are available. One company which offers weekly repayments is Sofa Club. You will need to discuss with the company directly if you wish to pay weekly.
Q: Do you have to pay interest when purchasing on finance?
A: For the most part, no, you do not have to pay interest. Most big brands offer up to four years of interest-free payments when you purchase a sofa on finance. However, some companies do charge a small percentage of interest on their finance plans.
Q: Is purchasing a sofa on finance affordable?
A: This depends entirely on the kind of sofa you wish to purchase and what your overall budget is. You can buy a basic sofa for as little as £5 per month, however, the higher the price of the couch, the higher the monthly repayments. Overall, it will be much more affordable than purchasing outright.
Q: Can you purchase a corner sofa on finance?
A: Yes, it is possible to purchase any sofa on finance, including corner sofas. However, they are typically higher in cost than standard sofas which means your monthly repayment fees will be higher.
